Phoenix Sinking

My niece recently asked me for some examples of nonprofits that, seeing the handwriting on the wall, scaled back, refocused, got strong, and then let the phoenix rise again.  I had numerous examples of nonprofits that had plenty of warning, didn’t heed the call and closed down, leaving no ashes from which the phoenix could even attempt to rise.  She’s working with an overseas client who is on the road to demise and her efforts and those of her colleagues to convince them to shrink to its core competencies has fallen on deaf ears; she was hoping some real live examples would do the trick.

But why can’t I find any?  Why do boards, executives and senior managers ignore the signs.  Why do we think that if we just struggle for another month or so we will accomplish what hasn’t happened in the many, many months before?  Where did we get the idea that sticking our heads in the sand will turn things around?  How many examples do we have of that working?

Then, because management and leadership did not take the time to learn any lessons, the organization will be right back where it started.  A futile “strategy”.  Whenever I say to a board and senior staff, “If your development strategy is to wait for the little old lady about whom you know nothing to leave you several millions of dollars in her will, you are going down,” everyone laughs.  But a year later nothing has changed, no new strategy has been introduced or greater results achieved.

Why are we so willing to completely fail—read, close an organization down—but not resize to save a mission?  Makes no sense to me.  Why can’t we see ourselves as others do?  Like the formerly overweight person who loses massive amounts of weight but still sees himself as fat though others tell him how fit and good he looks.  The once strong and stable nonprofit that doesn’t recognize its Achilles’ heel in its lack of diversified funding (read more than 51% reliant on one type of funding) that is shrinking but continues to see itself as successful and marches on while others shake their heads and worry about just how swiftly the organization will shut down.  Those examples are rampant; just look around your communities.

What is it about our society that seems to value only organizational growth while abhorring shrinkage?  We’ve developed a whole vocabulary for the latter, all of which is quite amusing.  We talk about downsizing, if we want to be direct, or rightsizing, smartsizing or workforce optimization, to mention but a few of the good ones, if we want to obfuscate and prefer euphemisms for the distasteful.

But obfuscation never served anyone in the world of business well.  Successful business is best served by direct and honest assessment, clear and strategic thinking, unswerving critical analysis, and the willingness to call it as it is, and not as it once was.

I continue to wonder about the group of people that would hire a new executive director, knowing the organization has been running a $100,000 deficit for a number of years, has an overhead that is more than two-thirds of its budget, has government contracts funding over 2/3 of its budget, and has a practically non-existent individual donor base—and discloses none of this, hoping candidates wouldn’t learn the truth before one signed on.

The law obligates all nonprofit board members to the duty of obedience—loyalty to the organization’s mission.   In other words, board members are legally required to do what is in the best interest of the mission.   Executive directors have a moral obligation to do the same.

BoardSource  expresses the duty of care, another of the three legal duties of board members, as “the level of competence that is expected of a board member.”  Moral practice holds executive directors to that same standard.

Where is permission to ignore the realities of the situation?   Where is there support to continue blithely along not recognizing that the walls around are crumbling?  Where in any of that is there authorization to wear blinders, chant a false mantra and continue to see things as they were and not as they are now?

Reality can be a tough thing with which to deal; going out of business is even harder.  A phoenix, however, is inspirational.